Commodities have been traded in the same way for hundreds of years. The Chicago Board of Trade (“CBOT”) began trading commodities in the 1800's. Since the inception of the CBOT, many different exchanges all over the world have been created and trade commodities.
Due to the recent evolution of the internet, electronic commodity trading has become a standard feature of exchanges. This has permitted vast accessibility to various exchanges without requiring that a user be present within the exchange and without the necessity of “paper trades.” Not only has the use of electronic trading greatly increased the ability for users to trade commodities, but electronic trading has also increased the volatility of the exchanges, since there are more users that have easier and faster access to the exchanges.
Electronic trading of commodities is achieved through a combination of exchange hosts, internet service providers (“ISPs”) and application service providers (“ASPs”). The exchange hosts are primarily responsible for order routing, price dissemination and connectivity.
The ASPs that are utilized in electronic commodities trading are responsible for, among other things, maintaining connectivity, hosts and clients. Connectivity is maintained with respect to exchange hosts through bidirectional communication with redundancy. The hosts are responsible for risk management throughout the trading day as well as the back office integration/imports. Hosts are also responsible for connectivity of the client session management, price dissemination and order routing.
The client is what the user interacts with directly. The client is responsible for connectivity through the Internet or through direct connection to the hosted server environment. The client includes a session management feature which will monitor client connectivity to the hosted server environment. Moreover, the client will typically include a configurable display that includes prices not only of the last trade, but also of the depth of market. The client also allows the user to manipulate orders, keep track of an order book and monitor account status, including balances, profit and loss and positions. Each of the exchanges has requirements in order for the hosts and the clients to participate in the market. While the exchange interface is the same for all participants, the different ASPs and proprietary systems interfaces can and do differ.
Different commodity trading companies typically include a custom trading front-end or platform which each company markets as providing a trading advantage over another commodity trading company. The general advantages an individual trader is seeking are speed and accuracy. Thus, a commodity trading company having a front-end platform that increases speed and accuracy over competing front-end platforms will give that commodity trading company a marketing advantage.
Accordingly, there is a continued need for commodity trading companies to provide features on their front-end platform which enable their users to schedule future trades faster and more accurately than competing commodity trading companies.